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New bankruptcy law raises limits

The New York State Capitol at Albany

The New York State Capitol at Albany Credit: Getty Images

Starting Jan. 22, those in bankruptcy will have several new and higher exemptions under the new state law that increased also home equity exemptions.

A taste of new exemptions (the old limits and higher ones to come):

-- Tools of the trade -- $600 to $3,000
-- Food and domestic animals – $450 to $1,000
-- Jewelry and art instead of just watches – $35 to $1,000
-- Books – $50 to $500
-- Motor vehicles - $2,400 to $4,000 or $10,000 for disabled-equipped car
-- Homes - $50,000 to $150,000 in Long Island, New York City, Rockland, Westchester and Putnam counties; new limits of $75,000 or $125,000 elsewhere, depending on the county
-- “Wildcard” on personal property and cash if no home exemption: $0 to $1,000.

The law, signed Thursday, was intended to better reflect today’s values and cost of living and bring the state’s exemptions more in line with those passed by other states.

“For somebody without a house, it makes life a lot easier,” said Woodbury bankruptcy attorney Gary Fischoff. “For somebody with a house, it’s great.”

New York State is one of the states that had opted out of federal bankruptcy exemption limits by setting its own.

But over the decades, the federal exemptions would have been better in many cases for bankruptcy filers. For example, renters could have gotten a $10,000 wildcard exemption under federal limits but just a $2,400 cash exemption under state rules, Fischoof said.
In 1995, the federal government doubled the value of property exemptions to account for inflation and also set up a cost of living adjustment. But New York did not.

Under the new law, New Yorkers can choose between taking exemptions under the federal bankruptcy laws or the state’s debtor creditor law. Also, the state will make cost of living adjustments, to be published by the state banking department.

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